Legislative Session Concludes

The Regular Session of the 85th Legislature adjourned on Monday, although Governor Abbott is expected to announce in the next few days whether he will call a special session. It was by and large not a session focused on business or infrastructure issues but rather one focused on social conservative matters - sanctuary cities, bathroom use by transgender people, abortion, voter ID, religious rights of foster parenting organizations, and so forth. But here is the impact on our industry.

One of the most significant outcomes was the passage of HB 3021 by Rep. Dade Phelan and Sen. Bryan Hughes. HB 3021 addressed the protections created last session for engineers and architects in contracts with local government entities and expanded them to cover contracts with state agencies and universities. The effect of the bill is that all governmental entities (not just local governments) can only get indemnity for negligence, intentional torts, failure to pay subconsultants, or intellectual property infringement. In addition, any requirement to defend the owner from a claim based in whole or in part from the owner's negligence is void. A customary standard of care is also required. This bill is the latest in a series of efforts by ACEC Texas to constrain professional services contracting to parameters of insurability.

ACEC Texas also worked with other organizations to defeat another bill in this area (SB 1215) that could have very negative impacts on liability. SB 1215 nominally provided that a contractor is not responsible for defects in plans and specifications. That sounds like common sense, but we wanted the bill authors to address concerns about the unintended consequences of this bill, specifically whether it could limit the contractor’s incentive to review constructability, increase expectations for perfection in plans, and shift liability to design professionals. We made several efforts to amend the bill to incorporate a statutory customary standard of care (in which case we would have been neutral on the bill), but the proponents rejected these amendments. So we opposed it in the House.

In the end, the bill in the form it was filed did not pass but was amended to substitute a study by a joint committee of members of the House and Senate that will review

- allocation of liability among parties involved in a construction project;

- relationships among parties to a construction contract;

- liens on real property arising from construction contracts;

- indemnification and insurance issues;

- warranties;

- standards of care; and

- civil actions and other forms of dispute resolution arising from construction contracts.

This action ensures that construction and design risk, insurance, and risk shifting issues in all contracts - public and private - will be a major topic of discussion over the next legislative interim.

A few other bills that passed in this area:

- HB 2121, providing that an award of damages in construction-related claims against the state may include attorneys fees.

- SB 807, providing that claims related to Texas construction projects may not be based on law in another state.

Transportation Issues: Outcome Mixed

This was never going to be a big transportation session, because of the effort spent, and the natural fall-off of enthusiasm from, the major efforts on funding in 2013 and 2015. Going into the session, the goal was to protect the new money from Prop 1, Prop 7 and ending diversions. This effort was successful. The state budget was balanced with a bit of gimmickry that defers the Prop 7 transfers to the highway fund by a few days, but this will not have an impact on the overall operation of the program.

The state budget appropriates approximately $719 million in FY18 and $702 million in FY19 for the Contracted Plan Design Manage budget strategy (this is spending authority, not contracts). The department received $427 million and $416 million for in-house Plan Design Manage (although this figure does not include the appropriations for benefits and support in other strategies) along with authorization for 300 new positions. These are expected to be focused on rural CEI and contract processing.

Also on the positive side, a DOT Sunset bill was passed with a 12-year extension, with language that enhances project accountability and performance measurement.

On the negative side of the equation, there continues to be strong push back against toll strategies, especially by Republicans in the metropolitan areas. The Sunset bill essentially eliminated toll equity by providing that the Transportation Commission must require that contributions to toll projects must be repaid. In a separate vote, the House voted down a bill to expand and continue comprehensive development agreements. There are many reasons for this outcome that bear further discussion - changes in legislative transportation leadership, lack of support from legislators from areas that have benefited and will benefit from tolling, and an inadequate effort to demonstrate that there are unfunded transportation needs even with significant new revenue.

On one other issue that ACEC Texas prioritized in this area, the Legislature made changes to to a revolving door provision in SB 20 from last session that dis-incentivized the participation of senior personnel in procurement decisions. SB 533 provides that an agency employee who participates in selection or negotiation is prohibited from going to work for a company involved in the procurement for two years after the procurement ends; the previous law (SB 20) applied the prohibition for two years after the employee left the agency, regardless of how long they worked after the procurement was over.

No bills that would significantly inhibit the continued development of high-speed rail passed.

Legislation authorizing the use of the Texas Mobility Fund for port improvements did pass.

Public Information/Open Records: Outcome Positive

ACEC Texas members generally dislike being forced under the Public Information Act to release information submitted in response to RFQs that provide an advantage to competitors (and are generally asked for by competitors). A Supreme Court decision in the Boeing case several years ago created a rationale to protect competitively advantaged information. However, Sen. Kirk Watson and Rep. Giovanni Capriglione filed bills (SB 407 became the main vehicle) to reverse this court decision and return to the days when all information submitted in a procurement was public when the procurement is completed. ACEC Texas helped lead the fight to defeat this legislation. In the end, Sen. Watson asked for an interim study on these issues.

HB 1295 Paperwork and Reporting of Relationships Between Vendors and Public Officials:

Outcome Status Quo

In 2015 the Legislature passed two bills that created significant paperwork and compliance issues for member firms - HB 1295 by Rep. Capriglione dealing with reporting of controlling interest by government contracting and HB 23 by Rep. Sarah Davis dealing with reporting of relationships and entertainment between vendors and local government officials. To her credit, at least Rep. Davis worked to address the interpretation issues created by her bill; a cleanup bill HB 2473 passed the House but was never referred to committee in the Senate by Lt. Governor Dan Patrick.

Rep. Capriglione, on the other hand, made little effort to clean up his bill and in fact filed legislation that would make it worse. ACEC Texas supported alternative legislation that would have maintained transparency but provided for annual filing, rather than the constant duplicative filings required by Capriglione's bill. In the end, neither bill passed. So the status quo continues in this area and we will revisit this issue next session.

Water, Natural Resources, Energy: Outcome Mixed

This was not a big session for water issues, although Rep. Lyle Larson, as the new Chair of the House Natural Resources Committee, passed several bills focusing on aquifer storage and recovery - one for a Water Development Board planning study on ASR opportunities and one opening the TWDB's state participation funding program to ASR.

The Texas Railroad Commission made it through Sunset with a 12-year extension, after failing last session.

Oil and gas, manufacturing, and chemical/energy groups worked to pass a bill creating heavy haul corridors around Texas ports and to successfully oppose restrictions on eminent domain, which particularly would have affected pipelines and electric utilities.

Other

- SB 1289, requiring the use of U.S. made iron and steel products in public projects did pass (with a few exceptions for electrical systems, other)